preliminary results for the year ending 31 december 2007 dr julian blogh chairman douglas caster...

Preliminary Results for the year ending 31 December 2007

Dr Julian Blogh Chairman Douglas Caster Chief Executive David Jeffcoat Finance Director

Ultra Electronics Preliminary Results 2007

2007 Overview


* before amortisation of intangibles arising on acquisition and profit/loss on financial instruments

Sales £m

20062005 2007

PBT* £m

20062005 2007

EPS* pence

20062005 2007

342.4377.0

412.9

54.9

47.4

50.7

58.4

61.1

65.4

• Another good year– revenue up 10%– PBT* up 11%– EPS* up 12%– DPS up 15%

• Margins maintained – investment to underpin medium-term growth– continuing currency impact

• 83% cash conversion• Four acquisitions made in 2007• Strong balance sheet• Order book of £621m provides good visibility


Financial Review


Profit & Loss


£m 2007 2006 Growth

Revenue 412.9 377.0 +10%

Operating profit* 62.9 57.5 +9%

Operating margin* 15.2% 15.3% -

Profit before tax** 61.1 54.9 +11%

Earnings per share** 65.4p 58.4p +12%

Dividend per share 21.2p 18.5p +15%

* before amortisation of intangibles arising on acquisition** before amortisation of intangibles arising on acquisition and profit/loss on fair value movements on derivatives


Revenue


Civilequipment16%(2006: 15%)

Civil aircraftequipment9%(2006: 9%)

Defenceequipment12% (2006: 13%)

Military aircraftequipment10%(2006: 10%)

Battlespace IT32% (2006: 29%)

Sonar21%(2006: 24%)

UK42%(2006: 40%)

Mainland Europe10%(2006: 9%)

North America42%(2006: 43%)

ROW6%(2006: 8%)

SectorDestination



Profit Progression

2006 OP* £57.5m

Currency translation -£2.2m

Currency transaction -£1.7m

Higher R&D costs -£5.7m

Organic growth +£6.3m

Improved margins +£6.4m

Acquisitions +£2.3m

2007 OP* £62.9m

* before amortisation of intangibles arising on acquisition



Currency Effects

US$ into C$ -4% -£0.9mUS$ into £ -2% -£0.8m -8% -£2.0mC$ into £ -3% -£0.2m

Revenue translation impact -£16.1m (-4%)

Profit impact

Total profit impact -£3.9m (-6%)

Transaction TranslationN/A

N/A

US$38m @1.13 US$68

m @1.82



New Business Development Expenditure

Ultra funded £30.2m

(2006: £22.9m)

Balance sheet

P&L

Capitalised development

costs£8.4m

(2006: £5.2m)

R&D capitalised£4.1m

(2006: £3.8m)

Development costs amortised

£0.9m(2006: £2.2m)

P&L charge£27.0m

(2006: £21.3m)

R&D expensed£26.1m

(2006: £19.1m)

Customer funded £74.8m

(2006: £69.4m)

Cash£105.0m

(2006: £92.3m)


Cash Flow


* before amortisation of intangibles arising on acquisition

£m 2007 2006

Operating profit* 62.9 57.5

Capital expenditure less depreciation (2.8) 0.8

Net capitalised development costs (3.9) (2.0)

Working capital (6.0) 0.3

Other 2.0 (0.1)

Operating cash flow 52.2 56.5

Cash conversion

83%

98%

Net debt at year-end

14.2

7.2


Operational Review

Ultra Electronics Preliminary Results 2007AIRCRAFT & VEHICLE SYSTEMS

Aircraft & Vehicle Systems OVERVIEW

24% of Group sales

26% of Group OP

Financial results

Revenue £100.0m +6% Profit £16.1m +22% Order book £181.6m +3%

Market trends• Buoyant civil aerospace market sector

– large backlogs and strong aftermarket

• Continuing military aircraft build commitment

– air superiority, ground attack and mobility

• Focus on improved armoured vehicles– new build and upgrades

• Satisfactory progress on five A400M development programmes

• Increased sales of HiPPAG airborne compressor

Business highlights• Investment in Boeing 787 systems continues

– flight-worthy equipment delivered

• Continuing development of JSF engine ice protection system

– selected for lift fan


Atkins• Software for crisis and incident management

• Differentiated through ease of use• Sells to MoD and emergency services• Key element of harbour and border protection

• Bolt-in to Datel business

Aircraft & Vehicle SystemsACQUISITIONS

AIRCRAFT & VEHICLE SYSTEMS

BCF Designs• Aircraft electronic test equipment

– fuel quantity– data buses

• US Navy contract driving growth• Broad defence and commercial customer base

• Bolt-in to Electrics business


Aircraft & Vehicle SystemsADVANCED SYSTEMS FOR ARMOURED VEHICLES

AIRCRAFT & VEHICLE SYSTEMSUltra Electronics Preliminary Results

2007

Indirect vision Electrical power management

Advanced remote control of weapons

Control panels


Aircraft & Vehicle Systems SELECTED OPPORTUNITIES

• Engine inlet ice protection

• Ice protection– engine intake and lift fan

• HiPPAG for weapons ejection

• Indirect vision system• Electrical power management• HUMS capability

£25m+2009FRES armoured vehicle electronics

• Vessel control and monitoring

£20m2008/10Astute submarine platform management

• Electrical power management• Indirect vision system• Crew controls

£15m+2008Armoured vehicle electronic upgrades

• Wing ice protection system• Proximity sensor electronics

$5m/$50m+

2008Boeing 787 production

$200m+2008Joint Strike Fighter

• HiPPAG for weapons ejection

$10m+ pa

2008HiPPAG for USAF multi-purpose bomb rack

ProductsEstimatedUltra value

Estimated date

Programme


Information & Power Systems OVERVIEW

INFORMATION & POWER SYSTEMSUltra Electronics Preliminary Results

2007

31% of Group sales

31% of Group OP

Financial results

Revenue £126.6m +5%Profit £19.6m +2%Order book £133.6m +21%

Market trends• Battlespace IT demand is strong

• Increasing demand for power equipment– naval, transit and nuclear

• Continuing investment in airport IT systems

Business highlights• Contract for combat system for Trinidad & Tobago vessels

• Strong demand for trackside power equipment

• Production commitment for submarine nuclear reactor control and instrumentation

• Airport IT system contracts around the world


Information & Power Systems ADVANCED AIRPORT IT SYSTEMS


2007

London Heathrow T5

Shanghai Pudong

Dublin

• Heathrow T5 success– excellent reference site

• International successes – IT integration– airport management– passenger processing– information processing– baggage processing

Cape Town


Information & Power Systems SELECTED OPPORTUNITIES


2007

• IT integration• Passenger, information and baggage processing

£20m+ p.a.2008+Airport IT system upgrades and extensions

• Power equipment• Signature management• Reactor control equipment

£20m2008Astute boat 4

• Power equipment• Signature management• Electro-optic sensors

£15m+2008UK aircraft carriers

• Trackside power equipment

£20m2008/2011Olympics transport infrastructure upgrade

• Surveys of existing systems• Outline designs• Nucleonic sensors and cables

£20m+2008/9Civil nuclear equipment upgrades

• Naval nuclear reactor control system

£20m2008/9Rolls-Royce RC&I production


Estimated date

Programme

Ultra Electronics Preliminary Results 2007TACTICAL & SONAR SYSTEMS

Tactical & Sonar Systems OVERVIEW

TACTICAL & SONAR SYSTEMSUltra Electronics Preliminary Results

2007

45% of Group sales

43% of Group OP

Financial results

Revenue £186.3m +15%Profit £27.2m +9%Order book £305.8m +3%

Market trends• Increasing demand for battlespace IT equipment

• Focus on upgrading capabilities of existing platforms

• Increasing focus on improving ASW and torpedo defence

Business highlights• Development contract for enhanced ASW capability • Completed development of higher capacity tactical radio

• Deliveries of sea mine disposal system to Royal Navy• Won secure communications upgrade for UK Tornado aircraft


Tactical & Sonar SystemsACQUISITIONS

TACTICAL & SONAR SYSTEMSUltra Electronics Preliminary Results

2007

Telemus• Small, specialist business• Electronic warfare and surveillance

– growing market sector

• Bolt-in to Tactical Communication Systems

Criticom• Secure and non-secure video conferencing• Embedded US high-grade encryption devices

• Broad defence and government sector customer base

• Bolt-on to Tactical & Sonar Systems



Tactical & Sonar SystemsWORLD LEADERS IN UNDERWATER BATTLESPACE NICHES

Innovative towed arrays for submarine and torpedo detection and defence

UUV for sea mine disposal

Ship bow sonar for submarine detection and obstacle avoidance

Advanced multi-static sonobuoy systems for airborne ASW

Expendable acoustic torpedo countermeasures

Systems to communicate with submarines at speed and depth

Ultra Electronics Preliminary Results 2007TACTICAL & SONAR SYSTEMSTACTICAL & SONAR SYSTEMS


Tactical & Sonar Systems SELECTED OPPORTUNITIES

• Data link equipment

• Ground control stations£50m+2009Position on UK team complex

weapons

• Sonobuoy receivers$50m2008New sonobuoy receivers for P-3 and P-8 aircraft

• High capacity tactical radio systems

$20m+2008/9High capacity tactical radios – export

• Command and control system• Surveillance equipment• Contingency planning tools

$20m2008/9Harbour surveillance and security systems

• Torpedo detection

• Countermeasure system£10m+2009/10US and export torpedo defence

systems

• Bow sonar• Towed array• Networked sonobuoys


Estimated date

Programme

£20m+2008Sonar system for Australian Air Warfare Destroyer


Maximising Long-Term Growth DUAL FOCUS – ORGANIC and ACQUISITION

Investing in programmes, processes and facilities:

• Boeing 787: $150k per aircraft• A400M: firm contracts for 192 aircraft

- total value to Ultra: £56m

• F-35 Lightning II JSF: $120k per aircraft• New facilities for Tactical Communication Systems, Datel and PMES

Investing in acquisitions: Criteria

– defence, aerospace or nuclear– related niche (new, adjacent)– widen geographic reach– value-enhancing

Bolt-ins- Videcom- Horizon- Polyflex- Winfrith- Telemus- BCF Designs- Atkins

Bolt-ons- SML- Ocean Systems- DNE Technologies- Audiopack- Criticom


Summary & Outlook


Summary & Outlook

• Good performance in 2007• Favourable market conditions

– large defence budgets with focus on enhancing capabilities– buoyant civil aerospace and airport IT markets

• Broad spread of niches and programmes gives financial resilience • Strong balance sheet, capable of funding further acquisitions• £621m order book gives good visibility• Growth to continue in 2008 and beyond

Preliminary Results for the year ending 31 December 2007

preliminary results for the year ending 31 december 2007 dr julian blogh chairman douglas caster...

Documents

acquisition slide

financial review slide

amortisation of intangibles

operational review slide

good visibility slide

civil aircraft equipment

military aircraft equipment

civil equipment